Noel Grima

Over the past days, there has been much talk and discussion in Malta what may be the impacts of Brexit - the UK's exit from the EU -on the Maltese economy.

Some speak of the fallout from Brexit hopefully meaning that companies now in the UK may relocate all or part of their operation to Malta to benefit from Malta's membership of the EU.

That may well be true but it is only part of the picture.

Others, with more reason, point out to the likely impact of Brexit on the Maltese tourism. One assumes that the Sterling will decrease in value compared to the Dollar and the Euro.

If that happens, a holiday in Malta, and anywhere else in the euro zone, will cost more for British tourists who, also because of the patriotic sentiment accompanying the Brexit referendum, may choose a 'staycation' or a holiday in Britain.

On the other hand, Malta is a well-known holiday destination for many Brits and a much-loved repeat destination.

But so far no one seems to have analysed the impact of trade between Malta and the UK.

As the accompanying graph from IMF shows, there are three countries with which the UK has a favourable trade balance - Ireland, Cyprus and Malta - all three with a colonial past.

With the rest of its trading partners, the UK has an unfavourable trade balance - in other words, exports to the UK are larger than the imports from the UK.

Understandably, Ireland has a far greater imports than it exports to the UK. Cyprus and Malta have remarkably similar trends with imports larger than exports to the UK.

Now assuming that the Pound's value decreases with the impact of a devaluation (which of course cannot happen inside the euro) imports from the UK will cost less while exports from Malta will cost more.

In Malta's case, all other things being equal, Malta may import more from the UK and maybe, with Malta's exports costing more, Malta may export less to the UK.

Again, this is all rather speculative since parts of what Malta imports from the UK may be devaluation-proof as may also be said of some of Malta's exports.